A 1000 - par value 25-year bond with 4% semiannual coupons is callable on any coupondate in the 12th to the 25th year. In the 12th to 17th year, the bond is callable at aredemption value of 1500. In the 18th to 25th year, the bond is callable at a redemptionvalue of 1200. (a) Calculate the maximum purchase price for this bond that will guaranteean annual nominal yield rate of at least 3% convertible semiannually. (b) Find the annualnominal yield rate compounded semiannually if the bond is called on the "best" date.

1. Calculating Maximum Purchase Price:. We have a bond with a face value (FV) of $1000, a coupon…

Answered: A 1000 - par value 25-year bond with 4%…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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